UPDATE 1-Italian banks help euro zone shares touch 5-1/2 yr peak
* FTSEurofirst 300 up for 5th straight session, rises 0.1 pct
* Euro STOXX 50 index briefly hits 5-1/2-year high
* Italian banks rally on Popolare, Monte Paschi boost (Updates at settle, adds volume, Fed)
By Francesco Canepa
LONDON, March 31 (Reuters) - Milan-listed shares outperformed skittish European bourses on Monday, helping a euro zone index touch a 5-1/2 year peak as the market welcomed signs that smaller Italian lenders are boosting their capital and winning over international investors.
Broader sentiment was also supported by expectations of new stimulus measures from the European Central Bank, cemented by lower-than-forecast euro zone inflation data, although some portfolio rebalancing at the end of the first quarter triggered a late selloff.
Italian mid-tier banks Banco Popolare and Monte Paschi were among top risers on the STOXX Europe 600 index, up 15.8 percent and 4.9 percent respectively, compared with a 0.2 percent rise for the whole index.
Banco Popolare was boosted by reports that it had attracted foreign investors to its capital increase, while Monte Paschi saw two big Latin American funds take stakes ahead of the bank's own cash call, a sign of growing confidence in the sector and in the Italian economy from international investors.
"This round of capital increases is seen as a reinforcing element for banks in the context of a more stable economic environment," said Roberto Brasca, who manages a pan-European equity fund for AcomeA and is overweight smaller Italian lenders. Continuación...